Spellman Financial Services

Key points to consider when taking out Life insurance

Key points to consider when taking out life insurance

Should I take out Life Insurance

If you have dependents – people who rely on you financially – then you should have life insurance.

In fact, if you have dependents and don’t have life insurance, you are exposing them to grave financial risk. And who would want to do that?

When you consider the cost we pay for trivial things. Life Insurance is extremely cheap. In many cases, less than a cup of coffee a week.

Life insurance tends not to feature on ‘to do’ lists because it makes us confront uncomfortable questions, such as what would happen to our loved ones if we were to die unexpectedly in the next few years.

However, we all carry a deep responsibility to ensure those we leave behind at least have sufficient funds to carry on with life if we’re no longer around.

That means putting plans in place to address unpleasant possibilities.

Types of Life Insurance

There are two main types of life insurance.

The one most people need is ‘term’ insurance. This pays out if the policyholder dies within a stated period – the ‘term’.

The other type – ‘whole of life’ insurance – pays out on your death, whenever that occurs.

This is more of an investment vehicle than a financial protection plan and is typically used for estate planning or to help pay for Funeral costs.

Dealing with debt

Term insurance pays out money that can be used to clear debts such as a mortgage, lifting a huge financial burden and enabling your loved ones to stay in the family home.

It can also provide for day-to-day living expenses – everything from groceries to utility bills, and from school and university fees to family holidays.

Key points to consider when taking out Life Insurance

Get enough cover

Buy sufficient insurance to take care of your family until the youngest is financially self-sufficient.

You both need it

If you’re in a couple, you both need cover, even if one of you stays at home. The proceeds can pay for services such as childcare and keeping up the house.

Or can be used to provide an income for a certain level of time, if the remaining partner doesn’t want to return to work for a while.

Buy separate policies

This would be the ideal case.

Joint life insurance covers you both under one policy, but separate policies are more flexible and provide greater protection, although they cost a bit more.

If you genuinely have a tight budget, joint cover is better than no cover. It will only pay out once, and will be slightly cheaper than having separate policies.

Work cover isn't enough

Many firms offer ‘death in service’ life insurance. However, once you’ve worked out how much cover you need, you’ll probably realise this isn’t enough and you’ll need a policy of your own.

In addition, death in service benefits are never guaranteed and employers can withdraw this benefit at any point.

The sooner the better

Because it will be cheaper. The older you are, the more expensive life insurance is, so bite the bullet and buy young.

Put your policy in trust

This sounds more complex than it is. If you tell your Advisor you want to do this, they will do it all for you.

If you are taking out the policy yourself. Just tell your insurer you want to do this. All it involves is completing a short form.

Doing so places the proceeds outside your estate so it can be paid to your beneficiaries without any delay associated with probate.

It also keeps the money from the clutches of the tax man.

Review regularly

Monitor your life insurance coverage to make sure it keeps pace with your circumstances.

Events such as marriage, the birth of children and moving home might prompt you to increase the amount of insurance you have.

Seek expert advice

Get in touch with us, we’ll be able to do all the above for you, find you cheapest and best policy for your circumstances.

Even better, we’ll be able to do it all for free. We do not charge for Insurance or Protection Advice.

Why use ourselves

Spellman Financial Services is a Mortgage & Insurance Brokers in Coventry which pride themselves on delivering an excellent service.

We can provide face to face advice to customers in Coventry & Warwickshire. Or a telephony service if you prefer, for Local or National Customers.

Luke Spellman, the Mortgage & Insurance Broker you will speak to, has over 10 years experience in Financial Services. 5 of which has been spent working directly with Mortgages.

Spellman Financial Services is an Appointed Representative of Openwork Ltd, which is authorised and regulated by the Financial Conduct Authority

Spellman Financial Services is registered for Data Protection purposes through the Information Commissioners Office